Chief Marketing Officers on a High

March 7, 2014

By Jack Loechner, MediaPost

According to the February 2014 edition of The CMO Survey of marketing leaders, CMO optimism for the U.S. economy reached its highest point in five years. CMOs reported an average optimistic score of 66.1 (out of 100), nearly 20 points higher than a low score of 47.7 in February 2009. This optimism occurred across all sectors, ranging from manufacturing to biotech and consumer packaged goods.

Underlying this optimism are improvements in key customer metrics such as increased entry of new customers into the market, increased customer acquisition, increased purchase volume, and increased customer retention. These top marketers also predict that customers’ top priority over the next twelve months will be a focus on product quality, not on low price. This shift indicates a belief that consumers are ready to spend again and are less interested in cost savings.

CMO optimism indicators for the overall economy and for their own organizations are at their closest point in five years. CMOs tend to be more optimistic about their own companies. The difference between CMOs’ optimism for the economy and their own companies was 16.5 points (64.2 for own company and 47.7 for the economy) in February 2009. In February 2014, the difference is 7.1 (73.2 for own company and 66.1 for the economy).

With optimism comes more risk taking, says the report. Over the next year, CMOs report their companies will spend more on market development strategies (sell existing products/services to new customers), more on product/service development strategies (sell new products/services to existing customers), and more on diversification strategies (sell new products/services to new customers). These three strategies are riskier than a market penetration strategy, concludes the report, which is projected to decline by 11%.

In terms of other growth strategies, CMOs report their companies will allocate 71.8% of their budgets to organic growth, where the company innovates using its own resources, compared to:

12.8% on growth via partnerships,

10.2% on growth through acquisitions, and

5.2% on growth from licensing.

The implication here is increased confidence in tackling innovation and developing markets in-house rather than buying it.

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